Lump sum - taxation question

Say one sold a house and one is a sole trader and one paid the CGT on the sale.

Then you put the funds on deposit which is subject to dirt.

How is the net of dirt figure treated in the sole traders tax accounts?

Is it taxed again at their marginal rate?
Is it subject to the levies?

I'm wondering like is the figure effectively taxed at over 60% if the person is on the higher rates?
Or rather at over 80% if you add the dirt into the equation ??

swanvill

Hi,
The interest earned will be liable to PRSI & Health levy.

Once you pay your DIRT tax at 25% it satisfies your full liability regarding income tax.

Regards,
Swanvill.

Past30Now

swanvill wrote: »

Hi,
The interest earned will be liable to PRSI, Health & Income levies.

Income subject to DIRT is not subject to the income levy.

From Revenue Income Levy FAQ's

1.4 What income is exempt from the income levy?
��
all social welfare payments including social welfare payments received from abroad
��
payments that are made in lieu of social welfare payments such as Community Employment Schemes paid by the Department of Enterprise and Employment or Back to Education Allowance paid by the Department of Education. [Appendix A contains examples of these types of payments]
��
income subjected to DIRT,

Mr. Incognito

How is the net of dirt figure treated in the sole traders tax accounts?

It is taxed gross with a credit given for the DIRT resulting in a net nil tax position.

Thanks.
Can I confirm then that if say dirt was at 30% and you are a 42% rate and your gross income is above €75k...then you would be charged 46% on that interest income ? Meaning if dirt was at 30%...if say the gross interest income for arguments sake was 10k
Then 3k is deducted at source and you have to return a further €1600 to the revenue when settling your final income tax bill in october ? Plus another 2 to 400 euro extra in prsi/health levies

So effectively the government will take 50% [not the 80%+] of the interest or more?

Past30Now

Deleted User wrote: »

Thanks.
Can I confirm then that if say dirt was at 30% and you are a 42% rate and your gross income is above €75k...then you would be charged 46% on that interest income ? Meaning if dirt was at 30%...if say the gross interest income for arguments sake was 10k
Then 3k is deducted at source and you have to return a further €1600 to the revenue when settling your final income tax bill in october ? Plus another 2 to 400 euro extra in prsi/health levies

So effectively the government will take 50% [not the 80%+] of the interest or more?

Hi Blackbriar,

Interest of €10K will be subject to DIRT of €2.5K, and when you are filing your tax return, may also be subject to PRSI and the health levy. Income subject to DIRT will not be subject to any further income tax. The total % of tax and PRSI payable will be between 25% and 33% depending on the level of PRSI chargeable.

Regards,

Past30